Canadian equities rise, but end lower on week

Traders weigh U.S. and Canada jobs data, Greek news

SAN FRANCISCO (MarketWatch) — Canadian equities finished higher Friday, finding support from strength in commodities and a global stock market rally, as traders cheered U.S. jobs data and news that Greece completed a deal with its private creditors to reduce its debt.

But weaker-than-expected data on employment from the Canadian government limited gains among stocks traded in Toronto.

The S&P/TSX Composite Index ($ISPTX) added 41.69 points, or 0.3%, to close at 12,503.62. The Canadian benchmark ended 1.1% lower than a week ago.

U.S. jobs report lifts stocks

(2:27)

U.S. stocks open modestly higher, with investors buoyed by upbeat news on jobs and the Greek debt restructuring, though gains were tempered by disappointing trade deficit data, Laura Mandaro reports on Markets Hub. (Photo by Andrew Burton/Getty Images)

Gains in Toronto Friday came on the heels of strength in stocks in the U.S. and Europe.

The U.S. Labor Department Friday reported that payrolls rose by 227,000 last month after a revised 284,000 gain in January. The jobless rate remained at 8.3%. Economists polled by MarketWatch had expected a gain of 213,000 in February. Read more on U.S. jobs data.

Meanwhile, European stock markets rose for a third day after Greece managed to pull off its closely-watched debt-swap deal, announcing that 83.5% of its private-sector bondholders agreed to a bond-swap deal. The Stoxx Europe 600 Index (SXXP) ended 0.5% higher. Read more on the European stock market.

Canada jobs data disappoints

Data on Canadian employment, however, disappointed some analysts.

Canadian employment was unchanged in February and a decline in the number of people searching for work pushed the unemployment rate down to 7.4% from 7.6% in January, according to data Friday from Statistics Canada.

Analysts at RBC Capital Markets said traders expected a gain of at least 15,000 jobs and for the jobless rate to remain steady.

But “the drop in the unemployment rate is a total head fake,” economists Derek Holt and Dov Zigler of Scotia Capital said in a note Friday. “It only fell because the labor force shrank with 38,000 people giving up searching for work, which is hardly a good sign.”

Overall, the report was “weak” and they said the data continue to point toward a loss of job market momentum.

“This is in keeping with our longstanding concern that Canada front-loaded its job gains early in the recovery cycle ... and that other countries like the United States that lagged on job growth at that point would come to surpass Canada later in the cycle,” Holt and Zigler said.

“The tone of the risks facing monetary policy has clearly shifted relatively more toward domestic concerns, and that’s one reason we flagged as to why the [Bank of Canada] was likely to hold off on tightening monetary policy,” they said.

The Bank of Canada decided Thursday to hold its key interest rate steady at 1%, saying the Canadian economy has marginally improved and the uncertainty around the global economic outlook has decreased.

Separately Friday, Statistics Canada reported that the nation’s merchandise exports declined 2.3% and imports edged down by 0.6%, with the trade surplus narrowing to $2.1 billion in January from $2.9 billion in December. That was the third-straight monthly trade surplus, data showed.

“Overall, the data indicate that net exports will contribute positively to first-quarter GDP growth, suggesting upside risk to our forecast of 1.5% annualized,” David Madani, Canada economist at Capital Economics, said in a note.

Against that backdrop, the Canadian dollar traded nearly flat against its U.S. counterpart on Friday. The U.S. dollar
USDCAD, -0.0834%
bought 99.07 Canadian cents, little changed from late Thursday, after earlier trading as high as 99.34 Canadian cents earlier.

Commodity boost

Despite the somewhat downbeat Canada jobs data, resource stocks were among the gainers in Toronto, buoyed by broad strength in commodity prices.

Neo Material Technologies Inc. (NEM) shares were among the standouts in Toronto trading, rallying 37% after U.S. rare-earth miner Molycorp Inc.
MCP, +0.55%
agreed to buy the company for about C$1.3 billion (US$1.3 billion). Read more on Friday’s hot stocks.

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